In another twist in the escalating battle for AI dominance, Google has hired Varun Mohan, CEO and co-founder of AI coding startup Windsurf, along with other key members of the company’s research and development team, to join its DeepMind division.
The move, confirmed Friday, deals a heavy blow to OpenAI, which had been in late-stage talks to acquire Windsurf in a deal reportedly worth $3 billion.
Instead of acquiring the company outright, Google opted for a strategic talent acquisition and secured a nonexclusive license to certain Windsurf technologies. This arrangement allows Windsurf to retain its independence and continue licensing its technology to other firms. The startup, now under interim CEO Jeff Wang—its former head of business—will continue to develop its AI coding products for enterprise clients.
“Most of Windsurf’s world-class team will continue to build the Windsurf product with the goal of maximizing its impact in the enterprise,” Wang said in a statement posted on X.
Google’s Deepening Bet on Agentic Coding
The hires are aimed squarely at strengthening Google DeepMind’s capabilities in agentic coding, a fast-emerging area of AI that allows systems to autonomously write, update, and maintain complex software. Google has said these new hires will help further its ambitions with Gemini, its flagship AI model suite that is being integrated across its products and services.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” a company spokesperson said.
Agentic coding refers to AI systems capable of carrying out entire software development workflows—from design to deployment—without step-by-step human input. It represents a leap forward from current AI assistants that mostly help with code suggestions or document summarization.
OpenAI’s Acquisition Talks Collapse
The Google-Windsurf deal reportedly ended OpenAI’s attempt to buy the startup. According to Reuters and CNBC, OpenAI had been in advanced negotiations to acquire Windsurf earlier this year, eyeing the startup’s unique capabilities and growing popularity in “vibe coding”—a term used to describe modern AI-assisted software development embraced by developers and non-developers alike.
OpenAI had also considered buying another AI coding startup, Cursor, but both bids ultimately fell apart. As Windsurf’s engineering core heads to DeepMind, OpenAI finds itself having missed out on one of the most coveted teams in the AI development tools space.
Founded with a focus on AI-enhanced coding tools, Windsurf quickly gained traction this year with its developer-friendly offerings. The company was gaining popularity in both developer and enterprise circles for its “vibe coding” experience—a form of intuitive, AI-guided code generation that reduces the learning curve for non-programmers while accelerating professional development cycles.
Windsurf’s growing influence had caught the attention of multiple tech giants. The startup reportedly began late-stage talks with OpenAI before being approached by Google. In the end, the allure of DeepMind’s resources and research environment appears to have tipped the scales.
Google’s move mirrors past maneuvers in the AI space. The company previously hired select staff from Character.AI, another AI startup, and has routinely absorbed top talent instead of acquiring entire companies. Meta, Microsoft, and Amazon have similarly pursued aggressive talent grabs. Meta recently onboarded Scale AI founder Alexandr Wang to lead its AI strategy as part of a $14.3 billion investment into Scale.
A Growing Arsenal for Google
The arrival of Varun Mohan and Douglas Chen, Windsurf’s other co-founder, gives Google additional firepower as it ramps up its challenge to Microsoft, OpenAI, and Anthropic in the race to build smarter, more autonomous AI tools for coding and productivity.
Microsoft, which has integrated AI heavily into its development stack through GitHub Copilot and Visual Studio Code, is also pushing agentic features. CEO Satya Nadella said recently that AI now writes 30% of Microsoft’s code. Similarly, Salesforce claims AI handles up to 50% of its engineering tasks.
Windsurf’s remaining team is expected to continue operating independently with a focus on enterprise integrations. The company plans to retain control over its product development while leveraging its nonexclusive licensing agreement with Google to scale selectively.
Google’s Push to Lead AI Market
As generative AI redefines how software is built, companies are scrambling to secure not just the models but the talent capable of pushing the boundaries. Windsurf’s engineers—now embedded at Google DeepMind—are expected to help develop advanced agentic systems that will likely show up in future iterations of Gemini.
By hiring out the core of Windsurf’s brain trust, Google DeepMind doesn’t just gain technology—it also cuts off a promising channel of innovation from reaching rivals like OpenAI or Microsoft. In a market where the difference between success and irrelevance increasingly comes down to who can build the best tools fastest, that’s no small victory.